Seagate CEO: Google, Web service giants upgrade storage almost yearly

Google (GOOG) buys a lot of hard drives. Consider that every time you do a search, Google stores information about things such as what you searched for, at what time, and how long it took you to find it. Increasingly in the Web 2.0 age, service providers also store our e-mail, documents, spreadsheets, Web pages, books, music, video and more.

Google’s not alone in this storage-buying bonanza; MySpace (NWS), Yahoo (YHOO) and Microsoft (MSFT) also digitally warehouse dizzying amounts of information every second, and have plans to store even more. In a way, the story of the mobile revolution is the story of both communication and storage – storage “in the hand,” through devices like Apple Computer’s (AAPL) iPod, and storage “in the cloud” on remote servers, through the likes of Yahoo Mail, Google Docs & Spreadsheets, and YouTube.

So when I talked to Seagate (STX) CEO Bill Watkins (pictured above) recently, I had a lot of questions about storage in the cloud. Mainly I wanted to get some sense of how excited the world’s largest hard drive maker is about the market opportunity in Web services, how frequently huge customers like Google buy more storage, and what kinds of advances Web services providers are demanding from the hard drive industry. Here’s a flavor of what Watkins told me:

Fortt: How big is Google for Seagate’s business?

Watkins: I’m not allowed to talk about it, but they’re big. They buy storage unbelievably. The more MySpace, the more stuff, the more content that gets on the Web, the more that’s got to be stored. … It’s not just how much content, it’s how much of the same content. And that’s what people are misunderstanding. We can calculate all the books and movies in the world, and we come up with this much. What they don’t realize is all those books and movies are being stored in a half a dozen different places.

Watkins: Cost per gigabyte. I need as much capacity as I can get for as cheap as I can get it. And give me power savings. They’re buying hundreds of thousands of drives. Massive amounts of storage. So they’re really concerned about the cost of that storage, and obviously reliability – obviously you’ve got to meet the reliability and quality issues. But it’s really about cost.

Fortt:How often do the big Web services providers replace their storage drives?

Watkins: Right now we know that when you do a 50 percent increase in capacity per drive, every time you increase the capacity for a 3.5- or 2.5-inch drive, the power savings almost compensate for replacing the unit. A lot of people just say fine, I don’t want to spend that much cash.

Fortt:But if you’re as big as a Google or a Microsoft, it’s pretty much a simple calculation?

Watkins: Exactly. Just cost. They figure it out, and they say OK, I’ll do this.

Fortt:You told me that right now Seagate is increasing capacity about 40 percent a year. So roughly every 15 months, you can make the case to the big players to upgrade their storage. What does the future hold?

Watkins: We’ll be out with a terabyte next year. Probably in the springtime, something like that, we’ll be out with the terabyte drives. They’ll start hitting the market, and it’ll be interesting to see how the people who are just using 400- and 500-gigabyte drives are going to go. We just morphed into 750GB, and we’re going to morph into terabytes.